Air France-KLM takes the Winding Tree road

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By Pamela Whitby|October 4, 2018

Air France-KLM has taken a cue from Lufthansa to become the latest major airline to sign a deal with Winding Tree, the blockchain start-up looking to play disruptor with its decentralised travel ecosystem.

“With blockchain technology, we aim to revolutionise exchanges within the travel industry for our customers, companies and start-ups,” said Sonia Barrière, EVP strategy and innovation at Air France-KLM, who cited the drive towards greater personalisation and delivery of a better customer experience as two main reasons for the move.

While the Lufthansa Group, which announced its partnership with Winding Tree in 2017, may be leading the pack, Air France-KLM started exploring the possibilities for blockchain back in 2016. According to Pedro Anderson, Winding Tree founder and COO, the two companies have been engaging for some time.

Although Iris Taguet, Air France-KLM’s head of blockchain programme, was mum about the impending relationship with Winding Tree, in a recent interview with conference organisers EyeforTravel, she explained that experiments to innovate with the technology had been underway since late 2017. These had taken place within the engineering and maintenance business of the group’s at the MRO Lab in Singapore.

The agreement with Winding Tree, announced today, is clearly part of Air France-KLM’s two pronged plan, as outlined by Taguet, to explore likely use cases. It is not only working in-house with external blockchain technology partners to experiment at the proof-of-concept level but also looking at industry wide collaboration.

Innovation focus

Barrière points to the airline’s long-standing commitment to startups and partners, and the idea is that Air France-KLM will support the developments of Winding Tree’s B2B platform by testing the technology and providing feedback.

Aside from blockchain, the airline also has dedicated teams working on artificial intelligence and the Internet of Things, and the potential for a project combining all three technologies is not something Air France-KLM is ruling out.

Some of the proposed hackathon challenges that Air France-KLM will be testing can be found here. Anderson explains: “These are things we're working on with all our partners.”

However, he insists that, “we're not building ‘copycat’ solutions for each and every airline. Instead we're creating one open source solution on which everyone is working together.”

Driven by use case

Though still a nascent technology, and best known for underpinning crypto-currencies such as bitcoin and ethereum, there are multiple possible use cases for blockchain that could be applied to the airline business, including the management of passenger identity, cargo, loyalty programmes, and finance and settlement.

One of the main reasons for this, is that airlines do not work in isolation. Among their many partners are the global distribution systems (GDSs), bodies such as IATA, which has its own ‘vision’ for blockchain in paperless operations, travel agents, airports, governments, tech suppliers and more.

Within that ecosystem some, like the GDSs, are dominant, and the hope is that blockchain can help to dismantle that. The aim of agreements like this one is, says the statement, “to provide, via blockchain technology, a more advantageous travel offer for customers which is more profitable for suppliers, in particular by reducing the number of intermediaries”.

Already, some airlines have introduced surcharges for any tickets issued through the GDSs; the Lufthansa Group led the way in 2015 with its €16 distribution cost charge (DCC), but others like British Airways and Iberia, both owned by IAG, have followed. Meanwhile, others have turned to IATA’s New Distribution Capability to transform how air products are sold.

As a transparent, secure information storage and transmission technology that removes the need for trust between transacting parties, blockchain is just another weapon for reducing dependence on intermediary partners. And, it seems that on this score the big airline hitters mean business.

Winding Tree, meanwhile, says it is talking to other airlines and further announcements, says Anderson, are imminent.